Abstract:
With rapid expansion of Foreign Direct Investment (FDI) throughout the world, the role
of multinational enterprises in technology transfer has received an increasing attention. In
addition, technology transfer is widely regarded as a pivotal process in the technological
capability development in emerging countries. As far as foreign investment is concerned
the Sri Lankan apparel industry plays a dominant role in attracting FDI over the past few
decades. This study, therefore, intends to identify the impact of technology transfer on
technological capability improvement in the Sri Lankan apparel manufacturing industry by
making a comparison between the foreign owned apparel manufacturing firms and domestic
apparel manufacturing firms.
Supported by literature, technology transfer experience was measured by analyzing the
technology components. As such, technoware (tools) and humanware (human skills),
and technological capabilities were assessed under three main capabilities; production,
investment and innovation capabilities.
Data was obtained through administering a structured questionnaire and having interviews
for a sample of fourteen apparel manufacturing companies. Data were analyzed using
statistical software package, SPSS. Evidence by significant differences in mean values
obtained reveals that the foreign owned firms are the direct beneficiaries of technology
transfer. Technological capability level of foreign owned firms were higher than that of
domestic firms. However, being a labour intensive industry, disregard of the ownership
of the firms, human capital is crucial for technological capability improvement in apparel
manufacturers. Therefore, though the foreign owned firms are considered as direct
beneficiaries of technology transfer, there was no significant evidence to prove that the
attracted technology plays a dominant role in improving the technological capabilities in
the Sri Lankan apparel manufacturers although technology transfer for improving their
technological capabilities and improving the technology components ofthe domestic firms
are crucial to survive in the highly competitive world apparel industry.
